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'Chainsaw Maidens From Hell': Matt & Mihai's Excellent Venture

Ben Affleck played in the movie Argo not only the role of lead actor but also that of producer, director, and writer, leading Forbes contributor John Greathouse to call him a “startup CEO,” given that “movie production crews are essentially temporary ventures.” But Argo was a typical Hollywood “startup,” with a $44.5 million production budget managed by veteran Hollywood “CEOs” (Grant Heslov and George Clooney were co-producers).

Real startups usually aim to become something bigger than “temporary ventures” and often challenge the way things are done in their industry (yes, I’m intentionally avoiding the word “disrupt”). Matt Martino and Mihai Dinulescu’s startup, SVG Films LLC, aims to show the world that you can be successful in the film industry today even if you don’t have a Hollywood-size budget.

“If we raise $100,000,” Matt told me recently over authentic Belgian waffles at Zinneken’s , “we will have all the resources we need to actually produce Chainsaw Maidens From Hellin 3D, which would make it the cheapest 3D feature film ever done, probably by over 100-fold.” Adds Mihai: “The cheapest narrative 3D movie ever made cost about $14.5 million.”

The shift from analog to digital is downsizing the “barriers to entry,” allowing new players to try their hand at movie production with drastically reduced financing requirements. “Usually most films are shot at a 10:1 ratio, 10 minutes in the can for one minute on the screen,” explains Miahi, “so you can see how this can becomes unbelievably expensive.” Says Matt: “It would be a different game, if I had to spend up to $200,000 on film. We’re in the low budget, independent film scene, because of the digital revolution.”

Digitization opens up the industry to outsiders like Matt and Mihai but also enlarges the pool of potential competitors. Their success depends on their ability to navigate their startup through all the minefields familiar to entrepreneurs in other fields: financing, product development, marketing, and establishing strategic partnerships.

Chainsaw Maidens From Hell is SVG Films’ first project, an original script combining elements of horror and comedy, “an updated take on the classic story of a boy who becomes a knight to battle evil monsters.” It’s written by Matt, who also plans to direct the film. He has spent the last ten years producing stage shows, short films, and Web content and managed to shoot a feature film with a miniscule budget—The Drachen Recruitment Experience—over four weekends in 2011. Mihai has co-produced a Jazz musical—Guy and Madeline on a Park Bench—an official selection at the Tribeca Film Festival and one of the “30 Best Films of 2010” according to TheNew York Times.

Starting with the product idea and its development, the decisions made by Matt and Mihai have been guided by their desire to ensure financial success. Matt: “For any investment you make, you want to minimize your risk and maximize your profit and that’s essentially the path that we attempted to go on. We really want to make it a commercially viable product, something that people will want to see. So we decided on a horror movie because there’s a great audience for horror movies and there are lots of channels to get the word out—blogs, websites, fan pages, podcasts, specialized magazines, festivals and conventions—that don’t cost tons of money. “

The well-defined target audience allows them to promote the film even before producing it and it already has more than 3000 followers on Facebook. The choice of genre also drives decisions about who to recruit to play in the movie with the goal being to secure the participation, even just for a cameo appearance, of actors and actresses that are well-liked by horror fans. And thinking about foreign sales, the film will include “a lot of slapstick humor—that’s funny in any language,” says Matt.

Beyond content, Matt and Mihai have found other ways to try and differentiate their venture. “What makes this movie unique—at least to me—is the strategic opportunity we have in allocating resources in a way that’s unprecedented,” says Mihai. He is a founding member of CEMI, an organization dedicated to creating and enhancing the electronic arts culture of Greater Boston. CEMI resides at the Artisan’s Asylum, a non-profit community craft studio in Somerville, Massachusetts. Part of the maker movement, Artisan’s Asylum’s mission is “to support and promote the teaching, learning and practicing of craft of all varieties” and it offers low cost resources to artists and an opportunity to teach their craft.

The idea Matt and Mihai have for the “strategic allocation of resources” is to reduce the movie production cost by involving the inmates of Artisan’s Asylum. The artists and artisans could produce the props, sets, costumes, and even help with sound engineering. SVG Films will pay for the cost of the materials but the work will be done as part of the ongoing process of creating and teaching at the Asylum, in exchange for being credited in the film and, in some cases, even showcasing the artists’ creations. “It’s the same kind of thing as product placement,” says Mihai, “but we go directly to the source.”

Another strategic partnership important for the success of Chainsaw Maidens From Hell is with House of Film, a well-established film sales and distribution company, combining traditional distribution with the latest in digital and Internet distribution. While the drastically reduced costs of producing and marketing independent films provide new opportunities to outsiders, they still need an established distributor to help get the films into the right film festivals, sell it to film buyers worldwide, and place it on the most effective digital platforms to ensure long-term revenues.

Finally, an important strategic partner for any business is the government, or more specifically, its tax code. Like other startup entrepreneurs and similar to CEOs of large companies, Matt and Mihai understand the importance of potential tax breaks. The Federal Film Tax Credit permits a 100% write-off for the cost of certain audio-visual works, regardless of what media they were destined for—theatrical, television, DVD, etc. In addition, Massachusetts has allowed since 2006 a 25% tax rebate on nearly all expenses for films shot in the state.

That’s a key selling point for potential investors, especially investors residing in Massachusetts, guaranteeing that they will get back at least a portion of their investment. Still, raising funds is the biggest hurdle for Matt and Mihai, as it is for other startups, and some of the decisions regarding the film’s production work both ways.

Producing the film in Massachusetts not only brings an additional tax benefit to investors, but it also cost less than it would cost in New York or Los Angeles. However, that’s were most people interested in financing movies reside and “we’ve found they don’t like the money going to Boston,” says Miahi. “The professional VCs in Boston look at our business plan and say ‘This is great! Too bad it isn’t about technology, but I’m sure someone will like it.’” Adds Matt: “You get tired of people saying, ‘This is great but it’s not what we do.’ It’s a catch-22: if we wanted to shoot somewhere else, there’d be more money available but we wouldn’t be able to do it for this amount of money. Someone’s got to be the one that says Boston can do this, we can do it in this city.”

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Indeed. It’s also the story–other examples of which I’m sure you see in your travels among entrepreneurs–of how digitization removes barriers to entry in many industries, encouraging more people to chase fewer VC dollars…